Swiss food giant, Nestlé, says it will pass on proceeds from a claim for damages against the Ethiopian government to famine relief.
Struggling to avert a public relations disaster, Nestlé on Monday declared it would make some $1.6 million (SFr2.26 million) available immediately.
The Swiss firm has come under fierce criticism from British aid group, Oxfam, which says the country - struggling to head off a famine - can ill-afford to pay.
Peter Brabeck, Nestlé's CEO, said the company had been "taken by surprise" by the Oxfam campaign, which he said had been launched without giving the company an opportunity to respond.
"We are not interested in taking money from the country of Ethiopia when it is in such a desperate state of human need," Brabeck said in a statement.
"We will therefore devote any money received from this settlement to both public and private efforts to relieve hunger in Ethiopia. This will take the form of both short-term relief aid and longer term food security."
Brabeck expressed disapointment at the campaign, saying Nestlé was prepared to discuss issues dealing with its operations.
"We regret that this issue resulted in hasty communications and misperceptions about Nestlé, but a positive benefit may be that it has focused attention on Ethiopia
"At this Christmas time, our thoughts turn to the billions of the earth's people who go to bed hungry. This is especially true of the people of Ethiopia."
Last week Nestlé said it intended to push ahead with a claim for $6 million in damages from the Ethiopian government over a company that was nationalised in 1975.
The company said the issue was a matter of principle.
"We are adamant on the principle that if property is expropriated, the state has to pay fair compensation for it," spokesman François Perroud told swissinfo.
The Ethiopian government offered to pay Nestlé $1.6 million to settle the claim.
Brabeck admitted on Monday that the company had been caught flat-footed.
"[It was] especially difficult for us to respond immediately, as an external Ethiopian lawyer engaged by a small subsidiary of Nestlé Germany is handling the sporadic negotiations and with whom neither we in Switzerland nor in the UK have any direct contact," he said.
"In our immediate response, our reaction was to issue statements that focused on the chronological history and legal aspects of the issue.
"Now that we have had time to consider the issue more fully, I want to personally communicate the company's position so as to leave no doubt as to where we stand."
Brabeck added that it was important for the long-term welfare of Africans that their governments comply with international law.
swissinfo and agencies.